The Total Money Makeover

I've already read a book this year! Yay!

(Thanks Ben for letting us borrow it.  Like a year ago...)

Anyways, EVERYONE should read this book! I agree with it 100%

Luckily the only debt Kyle and I have is our mortgage, but we can still do so much more to increase our wealth and be even smarter with money.

The book's motto:

"If you will live like no one else, later you can live like no one else."

He shared some other great quotes that can apply to other areas of life besides finances as well:

 "Being willing to delay pleasure for a greater result is a sign of maturity."

"Most people won't change until the pain of where they are exceeds the pain of change. Change will be painful, but the result will be worth it."

"There is no short cut to any place worth going."

"Good things come to those who wait."

"A man with an experience is not at the mercy of a man with an opinion."

 He explains why the following statements are all MYTHS:

1. Debt is a tool and should be used to create prosperity.

2. If I loan money to friends or relatives, I am helping them.

3. By cosigning a loan, I am helping a friend or relative.

4. Cash advance, payday loans, rent-to-own, title pawning and tote-the-note car lots are needed to help lower-income people get ahead.

4. "Ninety days same as cash" equals using other people's money for free.

5. Car payments are a way of life; you'll always have one.

6. Leasing a car is what sophisticated people do.  You should lease things that go down in value and take the tax advantage.

7. You can get a good deal on a new car at 0% interest.

8. You should get a credit card to built your credit.

9. You need a credit card to rent a car, check into a hotel or buy online.

10. The debit card has more risk than a credit card.

11. If you pay off your credit card every month, you get the free use of someone else's money.

12. Make sure your teenager gets a credit card so he or she will learn to be responsible with money.

13. Debt consolidation saves interest, and you have one smaller payment.

14. Borrowing more than my home's value is wise because I'll restructure my debt.

15. If no one used debt, our economy would collapse.

As well as 16 more (non) secrets of the rich!

I'll admit, I fell for numbers 8-11.  We have a credit card with a $3,000 limit just to "build credit" because we have the cash to pay it off every month.  We won't be using it anymore though!

Bad idea: Separate checking accounts.

"It's hard to have unity when you have separate checking accounts."  Marriage is about working as a team, "so combine the checking accounts."

Balance a written budget before the month begins.  Income minus your outgo should equal zero.

Every dollar is assigned before the month begins.

So for the baby steps:

1. Save $1000 cash for an emergency fund asap.

2. The debt snowball.

3. Finish emergency fund that covers 3-6 months of expenses.

4. Invest 15% of your gross income in retirement. (Growth-stock mutual funds, Roth IRAs)

The goal is security.  Security means choices.

5. Save for college. (Educational Savings Account)

6. Pay off your home mortgage.
(never take more than a 15 year, fixed-rate loan and never have a payment over 25% of your take home pay) Ooops...

7. Build Wealth!
In order to then have FUN, INVEST and GIVE (Money gives power to good intentions)

The peace and security that come from being debt free is so worth it!  I have never been in debt (besides a mortgage), the thought of it is enough to give me anxiety, because I know (on a small scale) of the blessings that come from being debt free!
I had a job from the time I turned 16 until I had my first baby over 10 years later and I am a saver.  Because of that I have been able to go on trips, help others and even saved for my mission (even though my dad and grandpa paid for it so I could have money when I got home).  Finally, after we bought our townhouse and Kyle lost his job 2 months later we were still able to stay out of debt cause we were prepared with an emergency fund.

The storms will come and we are responsible for preparing for those storms.

How?

READ THIS BOOK!

I fully believe this plan is possible if both people commit to it.  Too many people want what they want right now and are not willing to wait to actually save for it. The risk and worry of debt will not be worth it when the storms come.